Expectations For Supply Chains To Normalize in 2023 May Not Be Realized

After two years of pandemic-related disruptions, shippers hope for a normal supply chain by 2023. Unfortunately, it doesn’t look like normalcy will return next year.

Forty-five percent of economists surveyed by The Wall Street Journal in October 2021 estimated bottlenecks would ease by the second half of 2022. Now it’s May, and many shippers don’t see “normal” on the horizon.

Infrastructural challenges

Warehouse space is still too limited to keep up with online demand, and long-term solutions to manage higher volumes are expensive. To have anything resembling a normal supply chain in 2023, shipping companies will need to invest in significant structural changes. According to The New York Times, ships have been stalled at U.S. ports for an average of seven days since the start of 2022. That’s a four percent increase over the last year and a 20 percent increase since 2020.

In the US, the Biden administration announced a $550 billion federal investment into infrastructure, but it will take time for that investment to take effect. Shippers will be moving cargo via outdated roads, ports, and train tracks for years to come, and many shipping companies aren’t financially prepared to make long-term investments in infrastructure.

The pandemic effect

Months of shipping backlogs and labor shortages caused by a quarantined workforce have created effects that the global economy will be recovering from for decades. At the start of the pandemic, many manufacturers also cut their supplies, expecting the pandemic would decrease demand. Instead, internet purchases skyrocketed, and retailers responded by increasing their inventory.

Suppliers accustomed to lean, just-in-time manufacturing methods have been adapting ever since. The good news is that flexible sourcing and shortening supply chains helped shippers manage disruptions. The road to recovery is just longer than many economists expected.

The workforce shortage

Unfortunately, the workforce shortage highlighted truck driver retention, which has been a problem for years now. Driver retention won’t ease up any time soon, contrary to the hopes of many economists.

The American Trucking Associations expects the trucking industry to be short 160,000 drivers in the next ten years. Some companies are working to increase wages and working conditions for drivers and factory workers, but these changes have been slow to take effect. Incentives are necessary to bring about a normal supply chain in 2023.

Sustainability challenges

Supply chain issues caused by climate change aren’t going anywhere. Extreme weather events continue to drive supply chain disruptions and resource scarcity. Promoting a more sustainable supply chain means a collective commitment to investing in green energy and reducing greenhouse emissions.

According to a recent Oxford Economics survey, 88% of supply chain decision-makers have created or are creating a mission statement around sustainability. For half of these leaders, sustainability efforts will need to come with new initiatives to increase the visibility of their supply sourcing.

Resiliency and visibility

Since the start of the pandemic, the global strategy has been collective resilience, and with that resilience, a call for increased visibility. Suppliers are rebalancing on-shore and off-shore manufacturing, localizing supply chains, and diversifying sources. Shippers have also responded by expanding their carrier networks and growing collaboration of inventory optimization. For a normal supply chain in 2023, stop-gap resiliency measures must become the new normal.

A resilient supply chain starts with robust visibility tools. CTSI-Global’s Honeybee TMS allows shippers to forecast demand, manage access to over 20,000 carriers and respond to disruptions in real-time—including access to over 20,000 shippers.

Contact us and get the tools you need to mitigate risks in your supply chain.